Yazdani and Commissioner of Taxation (Taxation)

[2021] AATA 4814

Yazdani and Commissioner of Taxation (Taxation) [2021] AATA 4814 (23 December 2021)

Division: SMALL BUSINESS TAXATION DIVISION

File Number(s):      2020/6630

Re:Navid Yazdani

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Senior Member Linda Kirk

Date:23 December 2021

Place:Sydney

The Reviewable Decision is affirmed.

.................................[SGD].......................................

Senior Member Linda Kirk

CATCHWORDS

TAXATION – whether applicant eligible for JobKeeper payment – whether applicant included an amount in his assessable income for the 2018-19 income year in relation to him carrying on a business – whether the Applicant made a taxable supply in a tax period that applied to him that started on or after 1 July 2018 and ended before 12 March 2020 - decision affirmed  

LEGISLATION

A New Tax System (Goods and Services Tax) Act 1999 (Cth) ss 27-5, 27-10, 151-40, 195-1

Boosting Cash Flow For Employers (Coronavirus Economic Response Package) Act 2020 (Cth) s 5

Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) ss 5, 7, 20

Income Tax Assessment Act 1997 (Cth) s 995-1

CASES

Commissioner of Taxation v Apted [2021] FCAFC 45

Slatter Building Group Pty Ltd and Commissioner of Taxation (Taxation) [2021] AATA 456

SECONDARY MATERIALS

Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) ss 5, 11

Explanatory Statement to the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) and Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth)

REASONS FOR DECISION

Senior Member Linda Kirk

23 December 2021

APPLICATION FOR REVIEW

1. Mr Navid Yazdani, (‘the Applicant’) trading as All Neat, seeks a review of a decision of the Commissioner of Taxation (‘Respondent’) dated 12 October 2020 (‘Reviewable Decision’) disallowing the Applicant’s objection dated 13 September 2020 against a decision that the Applicant is not entitled to receive JobKeeper payments under the business participation entitlement.

2. The review application was heard by the Tribunal on 28 October 2021. The Applicant attended the hearing by videoconference and was assisted by his wife, Mrs Atefeh Mokhtari.

3. The following material was before the Tribunal:

   • T Documents filed 14 January 2021 (T1-T17, Pages 1-186)
   • Respondent’s Statement of Facts, Issues and Contentions filed 8 April 2021 (Pages 1-10)
   • Supplementary T Documents filed 8 April 2021 (ST1-ST4, Pages 1-12)
   • Applicant’s Statement of Facts, Issues and Contentions filed 30 April 2021 (Pages 1-3)
   • Applicant’s Supplementary Documents filed 30 April 2021 (D1-D8, 1-36)
   • Respondent’s Outline of Submissions filed 15 October 2021 (Pages 1-14)
   • Supplementary T Documents filed 15 October 2021 (ST5, Page 13)
   • Respondent’s List of Authorities (Pages 1-199) filed 26 October 2021

   RELEVANT FACTS

4. On 22 November 2018 the Applicant applied for an Australian Business Number (‘ABN’).[1]

   [1] T3/10. 

5. On 22 November 2018, the Deputy Registrar of the Australian Business Register (‘ABR’) notified the Applicant that he had been registered on the ABR and given an ABN, which was effective as of 22 November 2018.[2]

   [2] ST1/1. 

6. On 22 November 2018, the Deputy Commissioner of Taxation (‘the Respondent’) advised the Applicant that he was registered to report Goods and Services Tax (‘GST’) with monthly GST tax periods, effective from 22 November 2018.[3]

   [3] ST2-5.

7. On 19 December 2018, the Deputy Registrar of the ABR notified the Applicant his ABN was cancelled, effective from 22 November 2018, because the Applicant advised the ABR that he was no longer carrying on a business.[4]

   [4] T4-11.

8. On 19 December 2018, the Respondent notified the Applicant that his GST registration was cancelled effective from 22 November 2018, as the Respondent’s records showed that he was not carrying on an enterprise.[5]

   [5] ST3-7.

9. On 28 September 2019, the Applicant lodged his income tax return for the year ending 30 June 2019, showing employment income but no amount of income from carrying on a business.[6]

   [6] T5-13 to 46.

10. Following this, the Applicant applied for an ABN as a sole trader.  On 6 February 2020, the Deputy Registrar of the ABR notified the Applicant that he had been registered on the ABR and given an ABN, which was effective as of 5 February 2020.[7] The ABN was issued to the Applicant in respect of his activities as a self-employed gardener, which he says he commenced on 5 February 2020.[8]

    [7] T6-47.

    [8] T1-5.

11. On 20 February 2020, the Applicant was registered to report GST with quarterly GST tax periods, effective from 20 February 2020. The Respondent notified the Applicant of this registration by a letter of the same date.[9] The notice specified, ‘the tax periods that apply to you’ and stated that the GST tax periods applicable to the Applicant were ‘quarterly’. The letter continued:

    As your GST periods are quarterly, you need to lodge a GST return with us for each quarter. Quarterly tax periods end on 30 September, 31 December, 31 March and 30 June.

    [9] T7-51.

12. On 24 March 2020, the Applicant changed his GST registration to report annually. The Respondent notified the Applicant of the change to his lodgement cycle by a letter dated 24 March 2020.[10] The letter stated the change was effective from 1 July 2019.[11]

    [10] T8-53.

    [11] T8-53.

13. On 5 August 2020, the Applicant lodged a JobKeeper nomination form as an eligible business participant.[12]

    [12] T9-55 to 56.

14. On 6 August 2020, the Applicant submitted a JobKeeper application form, claiming payments under the business participation entitlement for the period 1 August 2020 to 31 August 2020. The Applicant did not complete the section titled ‘Eligibility for JobKeeper’.[13]

    [13] T10-57.

15. On 1 September 2020, the Applicant resubmitted a JobKeeper application form, claiming payments under the business participation entitlement for the period 1 August 2020 to 31 August 2020.[14]

    [14] T11-59.

16. On 8 September 2020, the Respondent notified the Applicant that he was not entitled to receive JobKeeper payments for the period he applied for under the business participation entitlement.[15]

    [15] ST4-9.

17. On 10 September 2020, the Applicant lodged his annual Business Activity Statement (‘BAS’) for the year ending 30 June 2020 and declared $35,483 in total sales.[16]

    [16] T12-61 to 62.

18. On 10 September 2020, the Applicant lodged his income tax return for the year ending 30 June 2020. He declared $32,438 in total business income.[17]

    [17] T13-63 to 96.

19. On 16 September 2020, the Applicant lodged an objection to the decision that he was not entitled to JobKeeper payments under the business participation entitlement.[18] The objection contended:

    a)His business was active from 5 February 2020 and he did not have income from this business in 2018 and 2019.

    b)He is eligible to receive JobKeeper payments for the claimed period if the Respondent uses the alternative test not the basic test.

    c)His business increased its turnover from February 2020 until June 2020. Due to Stage 4 restrictions in Victoria from July 2020, turnover for August 2020 decreased to $198 and turnover in September 2020 is expected to remain $0.

    [18] T14-97.

20. Attached to the Applicant’s objection were invoices from February 2020, bank statements for the period February 2020 to August 2020, and BAS from February 2020 to September 2020.

21. On 4 October 2020, the Applicant submitted a JobKeeper application form, claiming payments under the business participation entitlement for the period 1 September 2020 to 30 September 2020.[19]

    [19] T15-181.

22. On 12 October 2020, the Respondent issued his decision which found that the Applicant was not eligible for a JobKeeper payment as a business participant (‘the Reviewable Decision’).[20]

    [20] T16-183 to T17-185.

23. On 6 December 2020, the Applicant lodged an application for review of the Reviewable Decision with the Administrative Appeals Tribunal (‘the Tribunal’).[21] 

    [21] T1-1.

    LEGISLATION

24. The JobKeeper scheme is governed by the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (‘CERP Rules’), a legislative instrument made pursuant to subsection 20(1) of the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (Cth) (‘CERP Act’).[22]

    [22] The CERP Rules were amended a number of times in 2020 and different versions apply to the periods for which the Applicant claims to be entitled to JobKeeper payments. This decision refers to the version that was in force on 1 August 2020, being the first month for which the Applicant claimed JobKeeper. The subsequent amendments to the CERP Rules did not affect subsection 11(8).

25. The Respondent has responsibility for the general administration of the CERP Act: section 5 CERP Act. By virtue of subsection 7(2) CERP Act, the matters for, and in relation to, which the rules may make provision, include the eligibility criteria for a payment: paragraph 7(2)(a); and entitlement to a payment: paragraph 7(2)(d). The rule-making power conferred by subsection 20(1) CERP Act extends to making provision in relation to a matter by conferring a power on the Respondent to make a decision of an administrative character: paragraph 20(4)(b) CERP Act.

    CERP Rules

26. Part 2 of the CERP Rules is entitled ‘JobKeeper payment’. Division 3 of the CERP Rules deals with entitlements based on business participation and are those relevant to this review.  Section 11 of the CERP Rules is the relevant eligibility provision. It contains eight cumulative requirements that an entity must meet in order to be eligible for a JobKeeper payment for a business participant.[23] Section 11 provides:

    [23] A business participant is an individual who is not an employee but who is actively engaged in operating a business e.g. a sole trader.

    11   Entity’s entitlement to jobkeeper payment for a business participant

    (1) An entity is entitled to a jobkeeper payment for an individual for a fortnight if:

    a) the fortnight is a jobkeeper fortnight (see subsection 6(5)); and

    b) the entity is not a non-profit body; and

    (ba) the entity is not the approved provider of an approved child care service; and

    (c) the entity qualifies for the jobkeeper scheme at or before the end of the fortnight (see section 7); and

    (d) the individual is the eligible business participant for the entity for the fortnight (see section 12); and

    (e) the entity has notified the Commissioner in the approved form at or before the time referred to in subsection (2) that the entity elects to participate in the jobkeeper scheme; and

    (f) the entity has given information about the entitlement for the fortnight, including details of the individual, to the Commissioner in the approved form; and

    (fa) for a jobkeeper fortnight beginning on or after 28 September 2020—the entity has notified the Commissioner in the approved form as to whether the higher rate or the lower rate applies to the individual (see section 12AA); and

    (g) the entity has not notified the Commissioner in the approved form that the entity no longer wishes to participate in the jobkeeper scheme.

    Note 1: Some provisions of the Act also affect whether an entity is entitled to a jobkeeper payment: see section 14 of the Act (about record keeping) and section 19 of the Act (about contrived schemes).

    Note 2: The approved form may require further information: see paragraph 388-50(1)(c) in Schedule 1 to the Taxation Administration Act 1953.

    (2) For the purposes of paragraph (1)(e), the time at or before which the entity must notify the Commissioner that the entity elects to participate in the jobkeeper scheme is:

    (a) for an entitlement arising in the first or second jobkeeper fortnight—the end of the second jobkeeper fortnight; or

    (b) for an entitlement arising in another fortnight—the end of the fortnight.

    Note: The Commissioner may defer the time for giving an approved form: see section 388-55 in Schedule 1 to the Taxation Administration Act 1953.

    Only one eligible business participant per entity

    (3) An entity cannot be entitled under this section to a jobkeeper payment for more than one individual (whether for the same fortnight or a different fortnight).

    No other entity to be entitled for the same individual

    (4) An entity cannot be entitled under this section to a jobkeeper payment for an individual if another entity is entitled under this section or section 6 or 12A to a jobkeeper payment for the individual for the fortnight.

    Entity must notify individual

    (5) Unless the entity is a sole trader, the entity must notify an individual in writing within 7 days of giving the Commissioner details of the individual under paragraph (1)(f).

    Note: In the case of a sole trader, the entity and the individual are the same: see item 1 of the table in subsection 12(2).

    (5A) Unless the entity is a sole trader, the entity must notify an individual in writing within 7 days of giving the Commissioner a notice under paragraph 11(1)(fa) in respect of the individual. The notice must state whether the rate notified to the Commissioner under that paragraph was the higher rate or the lower rate.

    Integrity rule

    (6) An entity is not entitled to a jobkeeper payment under this section unless the entity had an ABN on 12 March 2020 (or a later time allowed by the Commissioner), and the requirement in subsection (7) or (8) is satisfied.

    (7) For the purposes of subsection (6), the requirement in this subsection is satisfied if

    (a) an amount was included in the entity’s assessable income for the 2018-19 income year in relation to it carrying on a business; and

    (b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the amount should be so included.

    (8) For the purposes of subsection (6), the requirement in this subsection is satisfied if:

    (a) the entity made a taxable supply in a tax period that applied to it that:

    (i) started on or after 1 July 2018; and

    (ii) ended before 12 March 2020; and

    (b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made the taxable supply.

    (9) For the purposes of subsection (8), in determining whether the entity made a supply (within the meaning of the GST Act) that is a taxable supply:

    (a) assume that the entity is registered (within the meaning of that Act); and

    (b) assume that the supply is neither GST-free (within the meaning of that Act) nor input taxed (within the meaning of that Act); and

    (c) for an entity carrying on business solely in the external Territories—assume that the external Territories are part of the indirect tax zone (within the meaning of that Act).

27. Subsection 11(6) of the CERP Rules provides that an entity is not entitled to a JobKeeper payment unless the entity had an ABN on 12 March 2020 (or a later time allowed by the Respondent) and the requirements in subsections 11(7) or 11(8) are satisfied.

28. Subsections 11(7) and (8) of the CERP Rules require that either:

    a)an amount was included in the entity’s assessable income for the 2018-2019 income year in relation to the entity carrying on a business, and the Respondent had notice on or before 12 March 2020 (or a later time allowed by the Respondent that the amount should be so included (subsection 11(7)); or

    b)the entity made a taxable supply in a tax period that applied to it that started on or after 1 July 2018 and ended before 12 March 2020, and the Respondent had notice on or before 12 March 2020 (or a later time allowed by the Respondent) that the entity had made the taxable supply (subsection 11(8)).

29. For the purposes of determining whether an entity made a taxable supply under subsection 11(8) of the CERP Rules, subsection 11(9) of the CERP Rules provides that it is assumed that:

    a)the entity is registered (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (‘GST Act’)); and

    b)the supply is neither GST-free nor input taxed (within the meaning of the GST Act); and

    c)for an entity carrying on business solely in the external Territories – the external Territories are part of the indirect tax zone (within the meaning of the GST Act).

    ISSUES FOR DETERMINATION

30. The parties are in agreement in relation to the facts relevant to this review.  What is in dispute is whether the Applicant satisfied the ‘integrity rule’ in subsection 11(6) which requires the Applicant to have an ABN as at 12 March 2020 (which he did), and that he satisfied either the requirement in subsection 11(7) or in subsection 11(8).

31. The issues to be determined by the Tribunal therefore are:

    1)Whether the Applicant meets the requirements in subsections 11(7) or 11(8) of the CERP Rules to be eligible for JobKeeper for reason he:

    a)    included an amount in his assessable income for the 2018-19 income year in relation to him carrying on a business;[24] or

    b)    made a taxable supply[25] in a tax period that applied to him that started on or after 1 July 2018 and ended before 12 March 2020.

    2)Whether the discretion in paragraph 11(8)(b) of the CERP Rules should be exercised.

    SUBMISSIONS

    [24] Paragraph 11(7)(a) CERP Rules.

    [25] Paragraph 11(8)(a) CERP Rules.

    Applicant

32. The Applicant does not dispute that he did not satisfy the requirement in subsection 11(7).[26] Further, the Applicant accepts that he was registered to report GST annually at the time that he enrolled into JobKeeper,[27] but argues that he is nonetheless entitled to JobKeeper. He contends that:

    ·The Respondent’s decision discriminates against new businesses;[28] and

    ·His situation is one to which JobKeeper should apply and is consistent with the purpose of the CERP Act and CERP Rules.[29]

    [26] T1-5.

    [27] Applicant’s Statement of Facts Issues and Contentions [2].

    [28] T1-5.

    [29] Applicant’s Statement of Facts Issues and Contentions, Issue Two.

33. At the hearing, the Applicant submitted that the legislation is very discriminatory against his situation.  He did not know when he started the business that his circumstances would have been different if he had submitted his tax monthly instead of quarterly or annually.  But this should not mean that he deserves ‘to be treated by discrimination from [the] Act.’ It is ‘not fair’ and he is ‘not happy’ about it.[30]

    [30] Transcript of proceedings, 28 October 2021, 17.

    Respondent

34. The Respondent submits that the Applicant did not meet either of the requirements in subsections 11(7) or 11(8) of the CERP Rules as he commenced business in February 2020 and was registered to report GST annually. Therefore, at the time he enrolled in JobKeeper, the Applicant:

    ·did not have any assessable income included in his 2018-19 income tax return in relation to carrying on a business; and

    ·did not make any taxable supplies in a tax period that applied to him that started on or after 1 July 2018 and ended before 12 March 2020.

35. The discretion in paragraph 11(8)(b) of the CERP Rules merely allows the Respondent to give the entity more time to provide him with notice that the entity made taxable supplies as required by paragraph 11(8)(a). The discretion cannot extend the period within which such taxable supplies had to be made. Accordingly, the Respondent submits that an exercise of the discretion in paragraph 11(8)(b) of the CERP Rules cannot and would not assist the Applicant.

36. It follows that the Applicant is not eligible for the JobKeeper payments and that the Reviewable Decision was correct.

    CONSIDERATION AND REASONS

    1)        Does the Applicant meet the requirement in subsections 11(7) or 11(8) of the CERP Rules to be eligible for JobKeeper?

    a)        Subsection 11(7)

37. The Applicant concedes that he did not satisfy the requirement in subsection 11(7).[31] He lodged his income tax return for the 2018-19 income year disclosing employment income but no income from carrying on a business during that year. Given that the Applicant only commenced carrying on a business on 5 February 2020,[32] he could not have included an amount in his assessable income for the 2018-19 income year from carrying on a business.  Accordingly, the Tribunal finds that the Applicant did not satisfy the requirement in paragraph 11(7)(a) of the CERP Rules as he was not carrying on a business at any time in the 2018-19 income year and did not report any business income in his income tax return for that year.[33]

    [31] T1-5.

    [32] T14- 99.

    [33] T5-13-46.

1. There is no reason for the Tribunal to consider whether the notice requirement in paragraph 11(7)(b) was satisfied in the Applicant’s circumstances. As he was not carrying on a business and did not derive any assessable business income at any time during the 2018-19 income year, there was no ‘amount’ of the kind referred to in paragraph 11(7)(b) of which the Applicant could give ‘notice’ to the Respondent whether on or before 12 March 2020 or at any later time allowed by the Respondent.

   b)        Subsection 11(8)

2. Subsection 11(8) of the CERP Rules requires identification of a ‘tax period that applied to [the entity] that … started on or after 1 July 2018 … and … ended before 12 March 2020’. It is ‘in’ that tax period, as so identified, that the entity must have ‘made a taxable supply’, in order for the entity to satisfy paragraph 11(8)(b).

3. The term ‘tax period’ is not defined in the CERP Rules.  However, subsection 4(2) of the CERP Rules provides:

   Subject to subsection (1), an expression used in this instrument that is defined in the Income Tax Assessment Act 1997 has the same meaning in this instrument as it has in that Act.

4. ‘Tax period’ is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (Cth) (‘ITAA’).  Subsection 995-1(1) of the ITAA provides that ‘tax period’ has the meaning given by section 195-1 of the GST Act.

5. Section 195-1 of the GST Act provides:

   tax period means a tax period applying to you under:

   a) Division 27 (about quarterly and one-month tax periods); or

   b) section 48-73 (about GST groups with incapacitated entities); or

   c) section 57-35 (about resident agents); or

   d) section 58-35 (about representatives of incapacitated entities); or

   e) section 151-40 (about annual tax periods); or

   f) section 162-55 (about instalment tax periods)

6. Subsection 195-1(e) is the provision that is applicable to the Applicant’s circumstances, Relevantly, section 151-40 of the GST Act provides:

   1) While an *annual tax period election that you have made has effect, each *financial year is a tax period that applies to you.

   2) However, if your *annual tax period election takes effect on a day that is not the start of a *financial year, the period from when your annual tax period election takes effect until the end of the financial year in which it takes effect is a tax period that applies to you.

   3) A tax period under this section is an annual tax period.

   4) This section has effect despite sections 27-5, 27-10 and 27-30 (which are about tax periods).

7. Relevantly, section 27-5 of the GST Act is entitled ‘General rule – 3-month tax periods’ and provides:

   The tax periods that apply to you are each period of 3 months ending on 31 March, 30 June, 30 September or 31 December in any year, except to the extent that:

   (a) an election is in force under section 27-10; or

   (b) the Commissioner determines otherwise under this Division.

8. Under subsection 27-10(2) of the GST Act, an entity may lodge an election to have one-month tax periods apply to it, which takes effect on the day specified in the notice given by the entity. However, the day specified must be 1 January, 1 April, 1 July or 1 October. Since the Applicant did not commence business until 5 February 2020, the earliest such an election could have taken effect, had one been made, was 1 April 2020.

9. Applying subsection 11(8) of the CERP Rules, the last tax periods that ‘ended before 12 March 2020’ are:

   a)    for entities that have monthly tax periods – the month ended 29 February 2020;

   b)    for entities that have quarterly tax periods – the quarter ended 31 December 2019; and

   c)    for entities that have annual tax periods – the financial year ended 30 June 2019.

10. The Applicant was registered for GST effective from 20 February 2020, initially with quarterly tax periods.[34] Accordingly, the first tax period that would have applied to the Applicant was the quarterly tax period ending 31 March 2020. This is not a tax period which ‘ended before 12 March 2020’ and therefore cannot be the tax period to which paragraph 11(8)(a) of the CERP Rules directs attention.

    [34] T5-51.

11. The Applicant changed his GST reporting cycle on 24 March 2020, to report GST annually, and was registered to report GST annually at the time he enrolled into JobKeeper in August 2020.[35] Therefore, the first tax period that applied to the Applicant was the financial year ending 30 June 2020. This is not a tax period which ‘ended before 12 March 2020’ and also cannot be a relevant tax period for the purpose of paragraph 11(8)(a) of the CERP Rules.

    [35] T8-53.

12. The Applicant provided monthly ‘GST Calculation Worksheets’ and ‘Business Activity Statement’ printouts between 1 February 2020 and 30 September 2020,[36] which appear to have been generated from the Applicant’s accounting software. They do not represent the tax periods applicable to the Applicant and were not filed (or capable of being filed) with the Respondent as BASs as the Applicant had an annual GST election during this period. The Applicant lodged his BAS for the year ending 30 June 2020 on 10 September 2020.[37] This material does not give the Applicant a tax period which ‘ended before 12 March 2020’.  Accordingly, the Applicant does not have a tax period capable of meeting the requirement in paragraph 11(8)(a) of the CERP Rules.

    [36] T14-131 to 164.

    [37] T12-61.

13. This interpretation of the CERP Rules is consistent with the Tribunal’s recent decision in Slatter Building Group Pty Ltd v Commissioner of Taxation [2021] AATA 456 (‘Slatter Building’).  In Slatter Building the Tribunal considered subsection 5(6) of the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (Cth) (‘BCF Act’) which contains an integrity measure preventing certain entities from being eligible for the cash flow boost incentive. Importantly, subsection 5(6) of the BCF Act is substantively identical to subsection 11(8) of the CERP Rules, requiring that:

    (a) the entity made a taxable supply in a tax period that applied to it that:

    (i) started on or after 1 July 2018; and

    (ii) ended before 12 March 2020; and

    (b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made a taxable supply.

14. The Applicant in Slatter Building was incorporated in January 2020, had registered for GST with effect from 20 January 2020, and had elected to account for GST on a quarterly basis. Accordingly, its first tax period was the quarter ended 31 March 2020, which also meant that the Applicant did not make any taxable supplies in a tax period that applied to it that ended before 12 March 2020. The Tribunal affirmed the Respondent’s decision that the Applicant was not eligible for the cash flow boost incentive because the Applicant did not satisfy the requirements in subsection 5(6) of the BCF Act.

15. The Tribunal considered the meaning of the phrase ‘tax period that applied to it’ and held that it refers to the tax period that applied to the entity. The Tribunal did not accept the Applicant’s argument that the word ‘it’ referred to the taxable supply and not the entity making it.  Deputy President McCabe and Senior Member Olding explained why this argument could not be accepted:

    26. The Applicant’s construction faces two significant textual hurdles.

    27. First, it would leave the words “that applied to it” in s 5(6)(a) with no work to do. The outcome sought by the applicant – effectively that it is sufficient to identify a taxable supply made in a tax period between 1 July 2018 and 12 March 2020 which need not be a tax period applying to the taxpayer – would be achieved if the words “that applied to it” had been omitted altogether.

    28. It is a long-established principle that constructions involving superfluidity should be avoided. The applicant seeks to avoid this problem by emphasising the BCF Act was necessarily prepared in haste. We acknowledge this but do not think this provides the Tribunal with a licence to depart from established principles of statutory interpretation. To be clear, we do not say the identified principle is an absolute barrier to the applicant’s construction. However, we do not think it would be correct to ignore it altogether. Even with the haste required, the drafters must be taken to have prepared the Bill for the BCF Act with longstanding principles of statutory interpretation in mind, especially one that has been described as the most often applied of such principles.

16. Slatter Building confirms that the term ‘tax period’ takes its meaning from the GST Act.[38] The Respondent contends that although Slatter Building concerned the BCF Act, it should apply equally to the CERP Rules because:

    ·the provision considered by the Tribunal was identical to that in subsection 11(8) of the CERP Rules;

    ·the definition provision in the BCF Act[39] adopts, as does subsection 4(2) of the CERP Rules, the definition of ‘tax period’ from the ITAA 1997; and

    ·the BCF Act, the CERP Act and the CERP Rules are part of the same economic stimulus package introduced in March 2020 in response to the COVID-19 pandemic.[40]

    [38] Slatter Building at [13].

    [39] Subsection 4(1) BCF Act.

    [40] Respondent’s Outline of Submissions [49].

17. In Slatter Building the Tribunal found that the Respondent’s construction:[41]

    …is consistent with the apparent legislative policy of ensuring cash flow boosts were not paid to entities established for the purpose of accessing the payments. That the mechanism employed to achieve that policy outcome also, on the Commissioner’s construction, excludes others does not mean the provision as so construed is contrary to the policy.

    ….

    We acknowledge s 5(6) may create hard cases at the margins. Some entities might miss out as an inevitable consequence of how Parliament has chosen to draw the line between eligible and ineligible entities. But that does not mean the criteria as we have interpreted them are inconsistent with the legislative purpose.

    [41] Slatter Building at [55] and [57].

18. This interpretation is consistent with the object and purposes of the CERP Rules, which are part of a system intended to provide financial support to eligible entities in the most efficient and effective way possible.[42] The system achieves this by adopting established taxation principles and concepts and by imposing requirements that have a temporal focus: the requirements in subsections 11(6), (7) and (8) look at the state of affairs of an entity as at 12 March 2020.[43] The requirement in subsection 11(8) promotes the objects of efficient and effective administration of JobKeeper payments because it allows the Respondent to use his existing system to quickly determine whether the entity has made a taxable supply in a tax period that meets the requirements of paragraph 11(8)(a).[44]

    [42] The Treasurer, the Hon J. Frydenberg stated that the ‘measures have also been designed to leverage our existing tax and transfer systems to ensure that we can get the support to the millions of Australians that need it in the most efficient and effective way possible.’ Commonwealth, Parliamentary Debates, House of Representatives, 8 April 2020, p. 2918.

    [43] Commissioner of Taxation v Apted [2021] FCAFC 45, at [10] (Logan J).

    [44] Ibid at [84] per Thawley J who observed, ‘[i]t is clear enough that the CERP Rules were intended to provide a quick and easy mechanism to determine as efficiently as possible who was, and who was not, entitled to an economic stimulus payment.’

19. The Tribunal respectfully adopts the interpretation of the relevant provisions of the BCF Act in Slatter Building, and finds that it applies equally to the provisions relevant to this review. Subsection 11(8) of the CERP Rules is an integrity provision intended to ensure that JobKeeper is available only to active businesses.[45] The language used in subsection 11(8) of the CERP Rules is clear. It requires the Applicant to have made taxable supplies in a ‘tax period’ (as defined in the GST Act) that applies to him that commenced on or after 1 July 2018 and ended before 12 March 2020. If there are no tax periods that applied to him (within the meaning in the GST Act) within the stipulated date range, then the Applicant cannot meet the eligibility criteria in subsection 11(8) of the CERP Act. The Tribunal in Slatter Building recognised that this interpretation means that ‘new entities accounting for GST on an annual basis, which commenced carrying on business from July 2019 would be excluded, because the only tax period that applies to them, a financial year, would end after 12 March 2020’.[46]

    [45] Explanatory Statement to the CERP Act and CERP Rules, 22.

    [46] Slatter Building at [50].

20. The Applicant was registered to report GST annually at the time he applied for JobKeeper in August 2020. As the Applicant commenced carrying on an enterprise in February 2020 the first tax period that applied to him is the financial year ended 30 June 2020. That is not a tax period that ended before 12 March 2020. The last annual tax period that ended before 12 March 2020 was the financial year ending 30 June 2019. However, the Applicant did not and could not have made a taxable supply in that tax period because he was not carrying on a business at any time in that financial year. Accordingly, the Tribunal finds that the Applicant did not satisfy (and was not capable of satisfying) the requirement in subsection 11(8) of the CERP Rules.

21. There is no reason for the Tribunal to consider whether the notice requirement in paragraph 11(8)(b) was satisfied. The Applicant did not carry on a business and did not make a taxable supply at any time during the financial year ended 30 June 2019. Accordingly, there was no ‘taxable supply’ that could have been ‘made’ by the Applicant ‘in’ that tax period, within the terms of paragraph 11(8)(a), of which the Applicant could give ‘notice’ to the Respondent whether on or before 12 March 2020 or at any later time allowed by the Respondent.

    2)        Should the discretion in paragraph 11(8)(b) of the CERP Rules be exercised

22. Neither the CERP Act nor CERP Rules provide the Respondent or the Tribunal with any discretion to extend the period in which a taxable supply can be made. The discretion contained in paragraph 11(8)(b) of the CERP Rules only allows for the entity to be given more time to provide the Respondent with notice that the entity made taxable supplies as required by paragraph 11(8)(a). The discretion cannot extend the period within which such taxable supplies are required to be made. Accordingly, an exercise of the discretion in paragraph 11(8)(b) of the CERP Rules cannot and would not assist the Applicant.

    CONCLUSION

23. The Tribunal acknowledges the difficulties faced by the Applicant as a consequence of the impact on his business of the lockdowns in Melbourne that were implemented in response to the COVID-19 pandemic. However, the relevant provisions in the CERP Rules must be interpreted and applied according to law, and there is no discretion available to the Tribunal that would allow a finding to be made favourable the Applicant.

    DECISION

24. The Reviewable Decision is affirmed.

I certify that the preceding 58 (fifty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member Linda Kirk

.....................................[SGD]...................................

Associate

Dated: 23 December 2021

Date(s) of hearing:	28 October 2021
Advocate for the Applicant:	Mrs A Mokhtari
Solicitors for the Respondent:	Ms R Galea, Australian Taxation Office